WBD482 Audio Transcription
Hyperbitcoinisation with Christian Keroles
Interview date: Wednesday 30th March
Note: the following is a transcription of my interview with Christian Keroles. I have reviewed the transcription but if you find any mistakes, please feel free to email me. You can listen to the original recording here.
Christian Keroles is Managing Director of Bitcoin Magazine. In this interview, we discuss hyperbitcoinisation as a zero-sum game and how that could lead to $26 million bitcoin.
“I feel like so many people that have multiple Bitcoins, 100% of their focus is to get more Bitcoin, or they’re playing this trading game, and they just don’t appreciate how many Bitcoin they already have. I’m just saying, appreciate your Bitcoin man. If you have one Bitcoin, respect that, that is generational wealth, respect that one Bitcoin could mean such an enormous amount to your lineage, and treat it as such.”
— Christian Keroles
Interview Transcription
Peter McCormack: What's up, brother?
Christian Keroles: Dude, it's good to be here, man.
Peter McCormack: It's good to be here with you, I've known you for a long time.
Christian Keroles: Yeah. It's amazing, I remember when I hit you up back in the day and you were just showing me the show numbers, and just amazing success, it's amazing. I feel like you, out of all of the creators that emerged out of the 2017 cycle, have really done just an incredible job of building a brand and growing a really excellent show and presence. So, congratulations.
Peter McCormack: Thank you. I don't want to talk about me! I do want to talk about you though. When we first met, you were running essentially sales, and now you're a content creator, leading voice --
Christian Keroles: Kind of.
Peter McCormack: You've been creating some great content. That has been a pleasure to watch, and it's great to get you on the show, and I like the idea that you pitched to us. You were like, "I want to talk about hyperbitcoinisation". We have not talked about hyperbitcoinisation for a while, and I'm going to have a bunch of questions for you. But why did you want to tackle this subject?
Christian Keroles: I just think bitcoiners think either way too short term, or think way too small about Bitcoin, and you can see it in their actions. So, I just want to give bitcoiners a little pep talk like, "Hey, it's time to zoom out, it's time to think big".
Peter McCormack: All right, man! Do you remember when you first heard about hyperbitcoinisation? The reason I ask is, when I first heard about it I was like, "Yeah, come on, man". I think I read it on Nakamoto Institute, and I was like, "Yeah, this is a cool, interesting, digital asset, I understand people are going to send it to each other. But this hyperbitcoinisation? No", I totally wrote it off. And then, four years down the rabbit hole having seen everything that's happening, I'm like, "Oh, shit, I get it now".
Christian Keroles: Yeah. I mean, I would say that the Bitcoin maximalists' perspective, at least what a lot of Bitcoin maximalists say they believe in, definitely captures this vision of ultimately all financial value will be settled, measured, communicated in Bitcoin. So to me, that's what hyperbitcoinisation means. Bitcoin is this substrate for communicating value, and I don't remember fully when I -- I mean, I heard about it pretty early on. I was class of 2017, so obviously Pierre and Bitstein had been putting out a lot of great information for a while at that point.
But my journey to, I guess, becoming Bitcoin only and really becoming a Bitcoin believer was pretty quick. I discovered crypto during the ICO bubble, I was in the tech space, and because I was in the tech space and venture capital and start-up in Silicon Valley, I already knew what it looked like for shitty start-ups to raise a lot of money. And then I just saw all these ICOs and I was like, "Oh, these are just really crappy, shitty start-ups and they're raising an order of magnitude more money than a normal Silicon Valley start-up". So, I was already primed to see through that, and I just went down a really speedy journey to, "Oh, wow, Bitcoin is really the signal here".
As I started learning more about what Bitcoin philosophers thought about what Bitcoin was going to do for the world, I was pretty openminded to accepting those ideas. So, I did not really push back on hyperbitcoinisation in my mind. I think I pretty much accepted it from the start. If anything, it articulated something that I already believed, which is that, "Bitcoin is going to be a big deal and sets a new neutral financial plumbing for the world. And hyperbitcoinisation is just an interesting articulation of that".
Peter McCormack: And do you think, when we go through hyperbitcoinisation and come out the other end, there are no fiat currencies; or, do you just think Bitcoin becomes the standard, becomes the measuring stick for everything else?
Christian Keroles: I think it's too early to tell how power dynamics are going to be in a Bitcoin-oriented world. A lot of people have talked about, it's going to reduce the power of the state, it's going to reduce the power of the printing press, and that kind of stuff, but it's too early to tell. So, I wouldn't want to say that there won't be fiat, but I do think that on the journey to hyperbitcoinisation, there's going to be the traditional economy, and then there's going to be the Bitcoin economy, and we're starting to see the Bitcoin economy getting bigger.
Ultimately, these two competing economies, the Bitcoin economy is going to prove to be a lot more efficient, it's going to prove to help the participants of that economy to allocate capital much more effectively. And what it's going to end up looking like is, "Oh, wow, there's growth in Bitcoin and there's stagflation in fiat". And I'm sure you know, when all the other amazing economists come onto your show, they've talked about the dying fiat system a lot.
Peter McCormack: A lot, a fuck load. Okay, so this is a really tricky and tough question, but how do we know when we've hyperbitcoinised; how do we know? Because, I think you can make an argument that some individuals have themselves.
Christian Keroles: Yeah, so some people are living in the Bitcoin economy. I would say that hyperbitcoinised, there's this point of the Bitcoin economy and the fiat economy are equally liquid, and then that's really when, I guess, if you look at the adoption S-curve, that's when you go critical on the adoption S-curve, because that's when there's no decrease in your ability to do commerce or manage an economy in the Bitcoin system, and then you just get all the benefits of the bitcoin system; you can just throw away the old system.
Peter McCormack: Okay, so there's a difference. People are on a Bitcoin standard now, I certainly am, you probably are.
Christian Keroles: It's helped Bitcoin Magazine a tremendous amount.
Peter McCormack: A number of Bitcoin companies, they are pricing in Bitcoin, they are holding Bitcoin on their balance sheet. Everybody's understood that if you play that four-year timescale, that it makes sense to hold Bitcoin and it accelerates growth; we've seen that, especially with the mining companies, having talked to them. A lot of companies or individuals are also playing that speculative attack, whether it's taking a loan to buy Bitcoin, whether it's buying property with the longest possible mortgage with the lowest possible rate, lots of people are speculatively attacking Bitcoin.
Christian Keroles: Refinancing.
Peter McCormack: Refinancing, it's happening a lot. We've seen Saylor do it, I've done it, lots of individuals have done it. So, that Bitcoin standard's happening, people are speculatively attacking fiat. I guess you're saying that's different from hyperbitcoinisation, where we see a massive FOMO of people coming off a fiat standard.
Christian Keroles: So, I would say we are living in hyperbitcoinisation; hyperbitcoinisation is the process. So, we're in the early year-ish stages of the process, at least before things have accelerated a lot. But obviously, the Bitcoin economy is big enough that it can support MicroStrategy, it can support El Salvador, it can support What Bitcoin Did and Bitcoin Magazine, and all those other organisations. And it's really about, during the process, there's the two side-by-side systems. One is shrinking, one is growing, and I think you can look at a lot of economic measures to show why velocity of money, and all this kind of stuff within the fiat system, is trending towards an unhealthy level, and then here on the Bitcoin side, the velocity is increasing.
All on-chain signals point to health, all fundamentals point to health within the system, and again people are prospering. You can just zoom out. Business in the system are prospering, maybe it's just because it's the bull market, or we just experienced a lot of price increases, but I just think ultimately, it's going to come down to Bitcoin helps you allocate capital better, Bitcoin is a better economic system, Bitcoin works; whereas the other system, it's difficult to make economic calculation. How can you make economic calculation if you don't know what the price of fuel's going to be like tomorrow? I think the price of fuel's increased by several -- 10 cents, 20 cents in California every single day, seven days in a row.
You can say that's extreme circumstances, but we've been experiencing the economic storm. We've been living in this economic storm in fiat for the last two years in a really obvious way, and it makes it hard to do business, it really does.
Peter McCormack: Well, I'm going to agree and disagree with you. I agree with you in terms of business planning, and the reason I know that is for the first time ever, I'm having to consider inflation causes in my contracts. Some of my contracts for sponsors are multi-year, break clauses, etc, has everything in it, but the price has always been fixed. And I accept there's 2% to 5% inflation, whatever. Even though we've got quoted 7.9%, we all know it's much higher than that. What I don't know is could we have a very weird event maybe in a year when we see 20%, 25%, could we? It's a possibility, it's an absolute possibility.
Christian Keroles: That's the trend, it's just going up.
Peter McCormack: We might see stability in the world and inflation might drop, I don't know. What I'm saying is, I don't know, and therefore I'm having to turn round to sponsors when we negotiate contracts and say, "I need an inflation clause. This is the price and next year is the price plus inflation". So, as you said, it makes it very difficult to economically plan.
But as you say, we are seeing prices on the pumps going up in terms of gas, but at the same time, if that was priced in Bitcoin, with the Bitcoin price being so volatile, you still can't fully economically plan in a Bitcoin standard. The only economic plan I can make with Bitcoin is that I know, historically, every four years, a Bitcoin has always been guaranteed to be worth more, every Bitcoin held for four years. That might not be the case forever. This year's been very weird and different.
So, I'm with you, I think a Bitcoin standard is better; but on the short term, I think economically planning on both is quite difficult.
Christian Keroles: Well, I think that right now, we're in chaos mode, where it's like we have a new system that's not liquid enough to rely on, and then we have the economic catastrophe that is the existing system, and we're just independent actors trying to make economic choices. I don't think anyone will argue that it's really hard to do that today.
My mum is a doctor, she runs her own practice, but with help, and the org that helps her, they cannot deal with it. They can't hire new people, they can't make any of these proper choices and adjust to the changing market dynamics, and it's a disaster for them, it's an absolute organisational disaster. Then, you can zoom out to unemployment in the US and in the West, and all these people that aren't working.
Peter McCormack: Why is that, though?
Christian Keroles: Again, I would say it's really hard to make economic calculations, and that's the economist's way of phrasing, "Hey, people are feeling depressed, they have no purpose in life, it's difficult to motivate yourself to participate yourself within the economy, and that's because the economy doesn't make sense.
Peter McCormack: It's funny you should say that, because we were out at dinner last night and Jimmy Song was there, and this is one of these things I'm going to say that if you're not in the Bitcoin world, you just think we're a bunch of weirdos and nutters, but it totally makes sense. He said, "There are a lot of people depressed at the moment. We've had a very difficult two or three years with all kinds of crazy shit going on. And if you don't understand Bitcoin, there is no hope". And that's not for everyone, but I think everyone in Bitcoin certainly has hope, because they're building a life and building businesses and careers and futures, based on the belief that this Bitcoin thesis will play out.
So, I don't have that depression or fear. It's got nothing to do with the money I hold, it's based on the fact that we're contributing to this better world, so I have that and that's the difference.
Christian Keroles: I mean, we're talking about all these bad things, right, and that gives me confidence that Bitcoin, as a better system, will win in the end. And when I think of how Bitcoin plays out, where this is hyperbitcoinisation, we're in the process of watching Bitcoin monetise in real time, again that's my opinion; and at the point when hyperbitcoinisation is completed, when the world is on a Bitcoin standard, that's when the journey begins truly. But I guess my pep talk, what I want to talk to bitcoiners about is, in my opinion, Bitcoin's binary. There is no such thing as a Bitcoin that is marginally successful.
Peter McCormack: Of course.
Christian Keroles: It's either the Bitcoin standard, or it kills itself. The economics don't work, the block reward goes to zero, no one's using the blockchain. It's either everyone's using the blockchain or no one's using the blockchain, and it dies, again in my opinion. So, it's either hyperbitcoinisation or irrelevance.
Peter McCormack: Why do you believe that, and it maybe isn't just that Bitcoin becomes another asset like gold?
Christian Keroles: I mean firstly, gold did become dominant, but there are a lot of constraints with gold, which enabled it to effectively be manipulated and taken over, centralised, however you want to describe gold's failure. Again, I don't think that Bitcoin has the same features as gold that made it fail. I think that we're in this global, internet-based world, where standards emerge and become dominant, and it makes complete sense that there's going to be a digital monetary standard. Again, I think that's going to be Bitcoin.
A lot of people have brought up FUD of, "Oh my God, Bitcoin might succeed, but it has all these economic issues with its incentive structures"; that doesn't make any sense to me. Again, it either has economic issues and Bitcoin's not going to succeed and it's going to go to zero and become irrelevant, or the world migrates to Bitcoin, there's a finite supply, finite block space, and there's no one who is thinking about what exponential growth looks like saying usage, and is thinking, "Oh, wow, miners aren't going to get paid". It just doesn't make sense.
If Bitcoin is the most important asset in the world, the miners will be the most important industry in the world, and they're going to be being paid a shitload. So again, I really do think it either succeeds or fails. And then, if it succeeds, we should be planning for either success or ultimate success or ultimate failure. And then, within ultimate success, we need to actually envision what exponential growth looks like.
Peter McCormack: I don't think gold failed, or has failed. I think it failed as a gold standard, but it hasn't failed yet as an asset. The price has grown at the moment and a large amount has been bought by Russia and China, and I think other countries right now may be considering buying more gold. I don't think the option is there to replace gold with Bitcoin yet. I could see a split allocation, but maybe it's 95% gold, 5% Bitcoin for sovereign wealth funds or nation states. That's not to say we're seeing a trend where it flips. I think it's too early to say gold's failed.
Christian Keroles: Sure, well I guess I was talking about a global gold standard.
Peter McCormack: Yeah, fine.
Christian Keroles: Yeah, the global gold standard has failed. I don't want to argue about the details of hyperbitcoinisation, I'm trying to zoom out. Again, there is a trend. Bitcoin's hyper, it's hyper-monetising, we're having a completely new independent system that, I'm sorry gold, does not include gold. Gold is part of the traditional system, so with the rise of the Bitcoin system, gold must inherently demonetise.
Again, my Bitcoin thesis is that the world will be priced in Bitcoin, maybe we'll have gold jewellery that's backed by Bitcoin so it actually has some value in it, maybe. So, I don't know. Gold's going to reduced down to its utility value, and I don't think that you can look at what's happening today and be like, "This is how it's going to logically work on a Bitcoin standard", because we live in fiat clown world, Peter.
Peter McCormack: I know.
Christian Keroles: I'm sorry, but asset misallocation is rampant. That is what fiat does, and rational decisions by rational actors within the clown world will be clown-y!
Peter McCormack: I bring it up for a reason though, because I am considering a gold allocation at the moment. Let me explain my thesis. I'm irresponsibly long Bitcoin, 95% to 100% Bitcoin. Bitcoin is not without threats, and to be that exposed at a time of significant economic issues, I have no hedge apart from property. So, I was considering taking 10% of my Bitcoin and putting it into gold, just as a hedge, just in case something crazy happened with Bitcoin. I don't believe it will happen.
Christian Keroles: So, I think this is where the bitcoiners might crucify me, but sounds like a fine idea, man. This is why I'm saying you need to look at the long game of bitcoin, because odds are, you already have enough Bitcoin, Peter. You have multiple Bitcoin? Okay, congratulations. You have enough Bitcoin, don't fuck it up, figure up how to protect yourself on this crazy journey and just get to the destination.
Peter McCormack: Okay, we can zoom out, but my point was, I don't think if Bitcoin doesn't become the global standard, Bitcoin still fails. I still think it has utility, I still think it has value, I still think it's an asset. All right, you never hyperbitcoinise, it didn't become the global standard, now it trends to zero; I personally don't think that happens. But that's me.
Christian Keroles: Yeah. I mean, again, I just think it succeeds, so I'm not really calculating that failsafe super-much, but ultimately maybe the incentives work out in a world where Bitcoin's marginally successful, like only a fringe group of people are running it just as a complete alternative system. Maybe it challenges the fiat system to get right enough, but I just personally think that, if you're talking about -- let me zoom out really quick, and let me deliver an example. So, do you know the story about why Google defeated Yahoo!?
Peter McCormack: Was that to do with page rank?
Christian Keroles: Yeah. So, at the time, Yahoo! was a much bigger company, much older company, very well-funded.
Peter McCormack: Actually, I thought they defeated AltaVista.
Christian Keroles: They defeated everyone, but Yahoo! was in play. So, Yahoo! was one of the dominant players at the time, and the way they were trying to curate the internet was they actually had manual curators. They had a room full of people that were actively curating the internet, creating an internet directory. And then, what Google did is used the page rank and keyword system in order to automate that. So, Yahoo! didn't stand a chance; Yahoo! got absolutely obliterated in the market.
So again, when I look at Bitcoin versus the traditional system, we're talking about human-curated monetary policy versus automated monetary policy. So, I'm just looking at past examples of things that happened in the past and I'm like, "Wow, Bitcoin's going to obliterate this, network effects are dominant. Okay, 21 million divided by everything. Let's figure out how much Bitcoin you actually need". That's how I'm looking at it.
Peter McCormack: That's a really, really good point. I've never actually heard anyone explain it like that, and I'll tell you why I think that's a really good point is because we spoke to Jeff Booth about money misinformation, and the problem with the current financial system is that it's so manipulated, there's so much misinformation in the system. And really what happens is, it's a small group of people who fuck it up for everyone else.
So, great example, cancelling Russia. You could put it really down to one man or a few psychos on each side, let's not get into the politics of why this war's happening. But to punish a leader of a country and some oligarchs, they've cancelled an entire country. Is it 144 million people live in Russia? They're all punished by this, and that is a system where a small group of people can ruin it for everyone else.
Jack Mallers loves to talk about an open monetary system. This is a system that benefits the billions, the hundreds of millions to billions. Therefore, the incentive structure flips in that the network effect is created, because nobody else can screw it up for them, every individual has that personal choice. So, I think that's a really good point.
Christian Keroles: Yeah. Again, Bitcoin is an evolution on the existing system. I'm very confident that Bitcoin will succeed at outcompeting the existing system from an economic perspective. Again, I'm not talking about Bitcoin's more noble, Bitcoin's sexier, the old system is hurting people; straight up, people are going to make economic calculations and more and more and more, they're going to be moving to the Bitcoin system.
Ultimately, if that does not happen, if there is another system that emerges, I don't see how long run, Bitcoin can just be marginally successful. It either achieves its ultimate destiny, and then again we've got to start thinking about how big hyperbitcoinisation is going to be, and think about, "What do I need to do to get there safely with my stack intact?" Or, you have to prepare for, "Okay, it's going to zero, and maybe I shouldn't allocate 100% on this bet. Maybe I should put myself in a position to live comfortably for the next ten years, and then be a fricking mega-billionaire on the other side of it with all my limbs and with my family intact and a nice fat weight, without being too skinny and living in a bunker".
So, I don't know, it's just important to put this thing into perspective, because if you're thinking, "Hey, Bitcoin's going to be $1 million in ten years, you might be way overweight on Bitcoin because you're bullish, but guess what; Bitcoin's probably going to be $26 million per coin in ten years, we'll probably be at full hyperbitcoinisation, and I hope you didn't lose your coins or trade early trying to time the market".
Peter McCormack: You think we're going to be at $26 million a coin in a decade? Bring it on, CK!
Christian Keroles: I'm just saying it's either hyperbitcoinisation or zero. I think it's going to happen in the next decade, people will argue with that. But ultimately, if we do get to hyperbitcoinisation, the global store-of-value market is conservatively $500 trillion. Divide that by 21 million, you're looking at $26 million per Bitcoin. I mean, that's conservative. I've heard store-of-value market is in the quadrillions, and now you're talking about multi-$100 million Bitcoin.
I think you've just got to be, "Hey, bitcoiners, this thing either works or it doesn't. If it works, what will the price of your sats be in that future?" and I think we need to get to that level.
Peter McCormack: I like $26 million a coin.
Christian Keroles: That's conservative.
Peter McCormack: I can get Bedford in the Premier League if that happens, on your conservative number! Okay, we can disagree on whether it's binary, and we don't really need to get into that, because we're talking about hyperbitcoinisation. But there's lots of interesting things that have happened during the history of Bitcoin. There's these key moments, whether it's buying two pizzas with 10,000 Bitcoin, or the Silk Road proving there's a marketplace for routing around government rules, whether it's Wikileaks getting removed from the payment rails and having the option of Bitcoin, whether it's Tesla putting Bitcoin on the balance sheet, whether it's El Salvador making it legal tender, all huge things that have happened which are truly incredible.
I'm waiting for somebody, a sovereign nation or someone to start pricing a commodity in Bitcoin. When someone sells oil in Bitcoin, I think that is the next massive leap in terms of what's happening with Bitcoin, and it's not happened, but you can see it happening, because right now people are moving off the petrodollar, right?
Christian Keroles: You see the cracks.
Peter McCormack: Yeah, you see the cracks. I mean, people are starting to price oil in the euro, they're starting to price oil in the yuan, we've seen Russia --
Christian Keroles: Russia wants to sell oil in roubles.
Peter McCormack: Yeah, no!
Christian Keroles: I mean, did we see the end of the petrodollar? I've been listening to your show when you've been talking about the petrodollar. Did we witness the end of the petrodollar?
Peter McCormack: Is that the show title, by the way?!
Danny Knowles: It could be!
Peter McCormack: We've got a show about that today, literally going out, with Nic Carter. I mean, I think it's over. I mean, I've got lots of questions about that separately, whether the US Government actually wants the end of the petrodollar, but that's a completely different conversation. My point being is, we've had these big jumps.
I didn't see, prior to the El Salvador announcement, I didn't see a country at that point making Bitcoin legal tender. And now one's done it, it's opened the door for other countries. My assumption is, within the next two months, we're going to see another announcement. I don't know, but that's my assumption.
Christian Keroles: The conference is next month, it's a pretty safe bet!
Peter McCormack: Well, that's why I've said that. My assumption is, I wouldn't be surprised if it's a collective of countries, and that's not me having any inside information. But there is an incentive for a collective, or a cohort of South American, Central American countries, to do this together. I wouldn't be surprised now if a country came out and said, "We're going to be selling some of our oil in Bitcoin". But when that happens, that is such a huge leap for Bitcoin.
Christian Keroles: Absolutely. And the crazy thing is, in 2019, I thought I was putting out such a bold take. I said, "By the time Bitcoin turns 20, there will be oil contracts denominated in BTC". So, Bitcoin is 13 years old now, and I think it's going to happen way before Bitcoin turns 20. So, I think things have accelerated a lot and again, once we get energy on the Bitcoin alternative economy, things get really real. Gladstein will make the arguments that all the wars that we've had since the 1970s have all been about energy and oil and the petrodollar. Again, energy drives what we do and energy's at the heart of Bitcoin which, again, is another reason to be really bullish on Bitcoin and not on some alternative cryptocurrency system that doesn't even get the energy play.
Peter McCormack: So, you're thinking this happens in the next decade, super-bullish?
Christian Keroles: Oh, yeah.
Peter McCormack: My assumption with that is, we've been in this "gradually" and we're going to hit the "suddenly" phase. You believe there are going to be some triggers and once they start, everyone starts flipping?
Christian Keroles: Haven't things escalated, and when they escalate, they escalate in big leaps like you just described there?
Peter McCormack: Of course, yeah.
Christian Keroles: I'm just betting on that to continue. That's how technology adoption works anyway.
Peter McCormack: Yeah, I do wonder, I think there's going to be some weirdness. There you go, look, food coming in! Everyone watching can see how we look after our guests.
Christian Keroles: They're keeping me fed.
Peter McCormack: What the fuck is that?
Christian Keroles: It's fiat food!
Peter McCormack: I've got a fiat drink here. With Bitcoin being inelastic and a very limited supply which is available on exchange, and we still have a part fiat world, the "suddenly" moves can always get a bit weird for some people, and some people transitioning into this, getting caught in the FOMO, can actually end up crushing themselves, if there was just a massive onramp. You talked about $26 million. That is not a straight line from here. But to happen in ten years, some people transitioning to a Bitcoin standard will actually potentially wipe themselves out.
For example, some companies could wipe themselves out, because I don't believe the transition can be easy and smooth for everyone. Anyone who's already in, great, they're going to crush it, they're going to have the capital to allocate to finance new companies, industries, individuals, charities, whatever. But with the price that was just shooting up and being to allocate their capital in, if there's a dip, they could get crushed. So, it's not going to be smooth.
Christian Keroles: I never promised it's going to be smooth. If anything, I'm promising it's going to be clown-y, it's going to be really clown-y. But we're lucky, and also we deserve to be in this position. We put in the hard work to learn about Bitcoin, and a lot of other people will too.
The interesting thing, at least, about Bitcoin adoption to me, is that you kind of see these eras of Bitcoin adopters. The early era was the cypherpunks and the Austrian Economists and libertarians; then the VCs; then you're just starting to see middle-class America and people who are maybe financially inclined. And now you're seeing blue-collar Canadians and every person who lives in Russia and the Ukrainian Government.
So, the level of priming that you need to see the value in Bitcoin is reducing a lot. So, in 2017 for me, like I said, I saw the value in Bitcoin, I was primed to see through the ICO thing, I was really into personal finance. Generally speaking, I had a lot of experience in open-source technology already, which is really random, but through college. So, I had three or four things that primed me to see value in this thing. The level of priming that you need today is so much less, and I know that you had three or four different priming points that allowed you to see this thing eventually.
Ultimately, for the listeners who know what the adoption S-curve looks like, that's what hyperbitcoinisation is going to look like, that's what roughly all parabolic, exponentially-growing technologies look like. So, the crazy thing about Bitcoin is there's also going to be a fiat price associated with that and, yeah, things are going to go crazy. Things in the meatspace are already starting to go crazy, and I think that that's just going to continue.
But we're already seeing safe harbours emerge for bitcoiners. You don't see safe harbours emerging for any other group of people across the globe other than bitcoiners, and El Salvador's the first, you think that more are going to come. I just think that trend's going to continue to expedite. And if we want to talk about growth within the alternative system that is Bitcoin, look at El Salvador. El Salvador's GDP outperformed a lot of other countries in the same time.
Peter McCormack: Have we double-checked the GDP thing? I've seen this, but I have a question regarding it, whether it's a post-COVID jump.
Christian Keroles: Have other countries experienced a post-COVID jump?
Peter McCormack: Yeah, because they had a COVID dip. So, is there a COVID dip and then a jump?
Christian Keroles: Got you; is it bringing them back to just normal?
Peter McCormack: Yeah, and then therefore, is it an advantageous GDP growth that you can use, I don't know? Do you want to look it up, Danny?
Christian Keroles: I mean, who knows if GDP is even a valid measure, right, but these are the measures that we have right now. And ultimately again, you can look at the companies too. Maybe it's just because we've been through this bull market, but Bitcoin Magazine, I can just speak for myself, we're very much positioned to wait out a cycle and deal with a bear market. So, yeah, I guess you're right, they're just getting back to pre-2020 numbers.
Peter McCormack: So that's, what, 2019?
Christian Keroles: And also, they were still recovering too before Bitcoin.
Peter McCormack: So, hold on, there's the dip in 2020; that's the COVID dip.
Danny Knowles: For sure. And then, I think these are just projected figures, because I don't know if they're official yet.
Peter McCormack: So, the new figures for 2021 was the record figures. But the point being is like, I saw that number and everyone was like, "Oh, look, El Salvador's got record GDP growth and it must be because they've become the Bitcoin country". I was like, "Hold on a second, we've just been through COVID and every country's had a GDP dip". So, just for anyone listening, that needs factchecking.
Christian Keroles: Yeah, thank you.
Peter McCormack: But that's not to say though, as somebody who's travelled back and forth, I've seen the changes in the country, and I'm perfectly aware that there's a number of good things happened. Not only have they seen a drop in violence, and it continues to drop and the murder rate's dropping, there's an increase in tourism. We know that factually, because every bitcoiner has been pretty much. Have you been?
Christian Keroles: I've not been yet.
Peter McCormack: Every bitcoiner apart from CK has been! When are we going?
Christian Keroles: Soon.
Peter McCormack: All right. But also, bitcoiners are going there. I'm also aware of a lot of the projects that have happened there: real estate companies going there to build out, I don't know what you'd call it, areas of property; what would you call that?
Christian Keroles: Developments.
Peter McCormack: Yeah, build out developments. There's investment in the hotels. The hotel Garten that I go to is looking to expand.
Christian Keroles: The hotels are getting on Instagram and Twitter and starting to market to listeners. What's that hotel with the giant volcano in the background, that looks incredible?
Peter McCormack: Yeah, I don't know, I've not been there. But more companies are opening offices there. So, without doubt there's economic investment, without doubt there's new economic spend that's happened there that wasn't there before, I don't know if that's seen a difference in the GDP. But what the real difference to them is, once the price starts to rally, Bukele's been stacking sats, he's been smash-buying on his phone, the country's primed to absolutely benefit from their Bitcoin stack. And now we've got the bond coming out, which if that does what I think it will do, they will be in a really, really great position.
They're not the only safe harbour. We've actually in a safe harbour here. We're in Austin Texas; Texas is Bitcoin country. I would be really interested to see them exercise state rights if there was anything that came down from the federal government that was overreaching against Bitcoin, because there is a lot of Bitcoin industry here, there are a lot of bitcoiners here. Governor Abbott is massively supporting Bitcoin, Ted Cruz is massively supporting Bitcoin. This is a safe harbour here.
Christian Keroles: Totally. I mean, the best thing about the US, comparative to other countries, other western democracies, is how strong state rights are. You get this geographical arbitrage domestically within the US and that's why I can leave California and have my same identity, all my same property, all this kind of stuff and come to Texas, go to Tennessee eventually and set up shop there. And I think Bitcoin brings that to the whole world, which is another reason why I think it's just going to accelerate, but it's happening within the US, it's happening in El Salvador, and other countries are going to join, other companies are going to join. MicroStrategy, I just think the trend continues and if anything, it just gets faster.
Peter McCormack: It's funny, I'm still struggling to communicate this across to friends and convince them of this, explain to them exactly where we are. I use Facebook for one thing and one thing only, which is to promote the podcast. I put out episodes, I say -- not all of them, I say, "This is one you might be interested in". One, two likes, three likes, I get the occasional message. But I started leaving other messages. I was just taking stuff that people say on Twitter and I was putting it into Facebook, "Inflation is coming, Bitcoin price is here", and we went through a period of about a year where I was showing inflation was rising and the Bitcoin price was rising. I could not get a bite, honestly. Say it was 1,000 people on there, maybe 3 bites of people asking questions, saying they can get in.
Yet, since I've got a football team, which is on a Bitcoin standard, I've been told over and over again, it's a scam, I'm a scammer, what's the scam I'm pulling, etc. So, that leap of faith from not knowing anything about Bitcoin to having an interest is still huge for people. Yet you're talking about a world that these people have got no idea that's coming, they cannot prepare for. How do we help people prepare; what can we do? Is it just a case, CK, everyone needs their moment, whether they're a Canadian trucker getting de-banked, or it's a Russian, or somebody that has massive inflation; what do we do?
Christian Keroles: Everyone gets the price they deserve.
Peter McCormack: I got a lot of shit for that tweet.
Christian Keroles: I don't know, it's one of the truest things that you can say. There's nothing you can do than what we're doing. You can try to communicate it better and hopefully -- it's like, the Bitcoin community, in my opinion, I got in in 2017, there was great education. The education's gotten a million times better. I think we're putting in our 50% and you can be critical, you can say we can do it better and I agree, we can. But ultimately, people need to meet us halfway, and they can only need it when they're ready.
So, I think it has to do with priming, so it's just difficult to get people to care for things that they're not primed for. But here's on the flipside. The people who enter Bitcoin last, on the flatter part of the adoption S-curve, those are going to be the most toxic maximalists, because they will have been fucked the hardest by the existing system for the longest. And these are people that today, they're the gold bugs who have a bunch of bullets and are prepping and they're holding down inside their place, and they're only accepting gold and cash and this kind of stuff, and they're just untrusting, because they will have been through a lot.
They will be the ones who are like, "I will only accept Bitcoin, I will never accept [whatever]" because they will have been through the whole thing, and they wouldn't have seen any of the insane gains. But at least they're on a sound system now, and they learned the hard way that this is why you trust a sound system.
Peter McCormack: I think you can also argue, whilst they've been the least fucked, when they do transfer across to Bitcoin, they face the least risk of Bitcoin not working.
Christian Keroles: Oh, yeah, it will be the most safe for them at that point, sure.
Peter McCormack: Greg Foss said to me, he said, "Bitcoin is way safer to buy at $40,000 than it is at $4,000".
Christian Keroles: I mean, it gets safer as it gets bigger, yeah. And then again, that hyperbitcoinisation point where the S-curve goes vertical, that has to do with liquidity. That's when the Bitcoin economy reaches parity with liquidity with the fiat economy. When that happens and there's no marginal liquidity benefits of being on the fiat system, that's when things go vertical. And that's when Bitcoin is most de-risked.
Peter McCormack: All right, so no-coiners get Bitcoin at the price that they deserve. All right, we've got loose Bitcoin, some people who've paid some attention maybe bought a little bit, they're also maybe buying jpegs and Solana and all that bullshit, good for them. But they're the ones who are most primed actually to be fully ready. How do you as a -- we're ready. As a loose bitcoiner, how do you become really ready? Or, am I not ready, CK, what am I missing; what am I not ready for? Do I need to think a lot more about custody, safety? I don't have to worry about being at a fat, healthy weight!
Christian Keroles: I mean, I would say that the key is, put your Bitcoin in perspective, put your Bitcoin stack in perspective, and then just know it's going to be a wild ride and focus on getting there. I feel like so many people that have multiple Bitcoins, 100% of their focus is to get more Bitcoin. Or, they're playing this trading game and they just don't appreciate how many Bitcoin they already have.
I'm just saying, appreciate your Bitcoin and if you have 1 Bitcoin, respect that that is generational wealth, respect that that 1 Bitcoin could mean such an enormous amount to your lineage, and treat it as such. Learn about the proper custody, learn about the proper plan to pass it down to your significant other or your spouse of your kids. Don't be that guy with 15 Bitcoin that gets in a car accident and then it's gone. Then ultimately, that is enough to make your entire family millionaires in the very short future.
So I'm just saying, maybe you don't have to stack every penny into Bitcoin if you already have enough. I'm not staying don't stack, I'm not saying don't continue to accumulate, don't take advantage of this massive opportunity to upgrade your family's wealth a lot for every dollar, every pound you put in; but also, know what you own. And for the shitcoiner or the person that's gambling on jpegs, be like -- I think Udi phrases it pretty well, "Hey, great, you made some money on Dogecoin. Put some of it into Bitcoin and know that Bitcoin has a chance to do this and don't fuck it up, just hodl".
Peter McCormack: I think that's Dan Held who says that.
Christian Keroles: All right.
Peter McCormack: Maybe it's Udi. I want to give the correct credit.
Christian Keroles: All right, Dan Held. Just put it in the world's soundest money, baby!
Peter McCormack: I sometimes wonder whether I've got enough Bitcoin.
Christian Keroles: You definitely do. Either that, or you're a bear.
Peter McCormack: Or an idiot.
Christian Keroles: I mean, I don't know about an idiot, but a bear.
Peter McCormack: I can think about back in 2017 how much Bitcoin I had; oh, fuck! Do you know that story?
Christian Keroles: I'm sure you could retell it. I know that David Bailey, the CEO of BTC Inc, says that, "You know how much of an OG one is based on how many Bitcoin they have lost".
Peter McCormack: We had a conversation with Bill Barhydt recently. What was it, Danny?
Danny Knowles: Oh, you'd said he'd given away thousands of Bitcoin.
Christian Keroles: That's an OG.
Peter McCormack: That's an OG, I'm not an OG. But there was a point in 2017, I don't mind saying this because I've got nothing near this anymore, but I was holding 182 Bitcoin.
Christian Keroles: That's fantastic.
Peter McCormack: No it's not, because I fucked it, traded most of it away, lost half of it in mining; I was a moron!
Christian Keroles: You were too early on the mining game, should have stuck it out.
Peter McCormack: I was too stupid on the mining game, fuck. If I had 182 Bitcoin and it's going to be $26 million, Danny, tell me?
Danny Knowles: I don't even want to tell you that!
Christian Keroles: You'd be fine.
Peter McCormack: It's about $4.2 billion? How close am I?
Danny Knowles: I don't know, I didn't even do it.
Christian Keroles: So, again, if you had that perspective, maybe you'd be like, "Fuck the mining shit, fuck the trading shit, I'm just going to hodl, I'm going to focus on my custody".
Peter McCormack: I would have.
Danny Knowles: $4.7 billion.
Christian Keroles: Pretty good maths!
Peter McCormack: Pretty good maths.
Christian Keroles: That's conservative too.
Danny Knowles: So, how much is enough, CK?
Peter McCormack: 6.15 Bitcoin, come on, baby!
Christian Keroles: 6.15, I mean you're in a good spot. I mean, again, if Bitcoin works. So, binary, hyperbitcoinisation or zero, put yourself at -- I think people need to put themselves in position for hyperbitcoinisation or zero. Call me a bear, but I think I'm a bull and maybe you can have enough Bitcoin and you can have some gold too just in case, you can have some property, you can buy some guns, you can take your vacation and eat the sandwich that you like and spend a little extra on the nice steak. You could do it all, especially if you have the earning power, especially if you've hit your goals already.
Peter McCormack: Okay, say you're right.
Christian Keroles: I hope so.
Peter McCormack: I kind of hope so, depending on the answer to the next question. But what are the downsides to hyperbitcoinisation?
Christian Keroles: This is a trap question.
Peter McCormack: Not really, because I've talked about it a lot on the show and I think there are. I think there are short-term negatives and then long-term positives.
Christian Keroles: A great way to think about this transition is this idea of peaks and valleys. So, peaks and valleys are evolutionist like in biological adoption. You get this peak of dinosaurs, there's the lizard species, the peak of them and they capture energy from the sun, they're cold-blooded, and then we had a decline. Now, we have the peak of mammals. Mammals are still ascending and we've become sentient and can observe our consciousness, are manipulating our environment and starting to harness energy.
I think we're climbing way higher than that previous peak, so I see Bitcoin as evolution. So, what's the downsides of evolution? We're getting better, we're evolving. Human beings will be able to allocate capital better; that's going to change our brains. We'll be able to manage our resources better; that's going to help the environment. We are going to be able to own our time better; that's going to help our happiness and our freedom, and maybe we'll have some more time to allocate capital towards causes that have long-term perspectives.
So, I think it's going to be a rough ride. I think there's going to be a valley to get to this next peak, but I think Bitcoin's evolution. What's the downside to getting better? Well I guess the bad shit died, so I'll shed a tear for that.
Peter McCormack: I mean, it wasn't a trap, it was more pointing at that. It's going to be a rough ride. So, say we didn't have Bitcoin, this fiat crash, this unwinding of the masses of amounts of debt in the system is going to happen, the end of this cycle would happen. I'm not smart enough to say what the transition would be without Bitcoin, but my assumption would be a great reset of sorts, a new Bretton Woods, remonetising of the world on another fiat standard; perhaps we would flip to a gold standard again temporarily and then come off it again, who the fuck knows?
Christian Keroles: Maybe China.
Peter McCormack: Maybe China.
Christian Keroles: That's what Dalio thinks.
Peter McCormack: Well, yeah. Maybe China, who knows? But with Bitcoin, we have a move to a Bitcoin standard. I can't say in the short term, if we didn't have Bitcoin and we went to a new fiat standard, or we have Bitcoin and we move to a Bitcoin standard, once those standards happen, which would be a net rougher ride. A managed global elite remonetising our new fiat standard might be a bit more stable, because there's some control they can put in place. They control armies, they control banks, etc, they control the capital.
On a Bitcoin standard, it's more decentralised. It could be more rocky, it could lead to different types of poverty, famine, war that we aren't prepared for, and I don't know, I think there's no way of knowing. But when I make this show, I can't talk about the migration to a Bitcoin standard and not talk about how rough the ride will be, what are the potential risks, how people should think about preparing, because this is real life. Do you understand where I'm going with this?
Christian Keroles: 100%. I can only promise that it's going to be clown-y. And clown world is dangerous, it's really dangerous. The clown world kills. I don't know, I think people need to have their -- if we are truly in a transition, I think we are evolving to a higher standard, to a higher way of doing things, that are going to make us better as a human species. It's going to help us manage all of our resources better, but it's going to be painful. There's no way to convert that much value into Bitcoin without volatility, pain and fighting. But it's coming, so prepare for it. I'm trying to give bitcoiners a pep talk. Prepare for hyperbitcoinisation. It's coming and it's going to be messy.
Peter McCormack: And again, you think a decade. Are you running a thesis by other people, or do people agree with you, disagree?
Christian Keroles: There's the people who think it's going to take not in my lifetime, and then there's people who think it's going to happen really fast. I think it's going to happen really fast, because exponential technology built on top of exponential technology, you know, iPhone came out in 2008. We're in 2022, everyone has an iPhone or a Smartphone. It didn't take that long, and Bitcoin's built on top of that.
Peter McCormack: On top of the internet.
Christian Keroles: Even more so, cell phones blew up, and that wasn't with desktops shooting themselves in the foot, that wasn't with telephone communication systematically dismantling itself. So, I'm just looking at the signs, and I'm making what seems to be a pretty logical conclusion that this is going to happen pretty quickly. How long did it take for Uber to dismantle the taxi industry?
Peter McCormack: Well, it's not completely dismantled it like you say.
Christian Keroles: No, they took the knee, they made their own apps, no one uses them anymore. It sounds like CBDCs.
Peter McCormack: What do you think happens with CBDCs during this? There will obviously be attempts.
Christian Keroles: I don't think they're ever going to ship.
Peter McCormack: You don't think they ship?
Christian Keroles: Yeah, just Tether, stablecoins lead the dollar evolution. Hyperdollarisation in the next five years followed by hyperbitcoinisation.
Peter McCormack: I mean, China has shipped a CBDC.
Christian Keroles: Does anyone care about that unit?
Peter McCormack: I'm just saying, they have, other people will. You mean more western, liberal democracies, they don't ship?
Christian Keroles: Okay, maybe that's a hyperbolic statement to say no CBDCs will ship. But ultimately, this meme of CBDCs will never actually happen. They'll do airdrops, maybe they'll ship, maybe they won't ship. The ones that ship, they'll do all this frivolous stuff to try to get it to catch on. But my point on why I don't think CBDCs are going to ship is because it's really, really hard to bootstrap a new monetary unit, it's really hard. Even the dollar didn't bootstrap itself, it was built off of gold's pre-existing monetary years, which took thousands and thousands, millions of years. All previous fiat currencies had bootstrapped off of some sort of precious metal standard.
Bitcoin is already bootstrapping, it's using some alchemy of proof of work, energy, market to come up with its price, but it has bootstrapped the monetary unit. I don't think that it's going to be that easy for central banks to bootstrap new monetary units just like that in a world where Bitcoin exists. And, stablecoins exist, the dollar standard. Bitcoin is not what's going to murder the fiat standards across the globe, it's the dollar.
The dollar's coming through, its liquidity is just destroying everything. If you're in Lebanon, you're begging for Tethers and USDCs. That's going to continue. I don't know if the US is going to nationalise all these stablecoins, but these stablecoins are demand for Treasury, they provide Treasury demand, so they are part of the dollar system. I don't think other central banks are going to beat the dollar. I think the only thing that's going to beat the dollar is Bitcoin.
Peter McCormack: So, you think it's going to be more like the free banking era that Nic Carter wrote about, whereby there will be stablecoins, there will be --
Christian Keroles: Nik Bhatia, no.
Peter McCormack: No, Nic Carter wrote about the free banking era. Nik Bhatia on our show talked to us about more sort of bank-issued, so you'd have your Wells Fargo dollar and you'd have your Chase dollar.
Christian Keroles: It's easy again, the dollar extension game.
Peter McCormack: But there's a lot of logic to having a blockchain-based digital dollar right now.
Christian Keroles: That's the dollar.
Peter McCormack: If you're in Lebanon, if you're in Turkey, if you're in Argentina, yeah, you might want some Bitcoin. But really, day-to-day, you need the dollar to be able to price goods, to be able to trade, to be able to protect your wealth.
Christian Keroles: That's why liquidity is so important, that's what I'm talking about. We hit the vertical of the S-curve when Bitcoin's economy is comparable and not before. Until then, you'll always need liquidity in the opposing system, unless you make some sort of sacrifice to stay within the Bitcoin economy.
Peter McCormack: In some ways, as a rallying call to bitcoiners, should we also give a little bit of -- extend the rope a little bit to Tron and Ethereum, because they are providing the platforms for digital dollars, which are useful for people; should we stop that fight?
Christian Keroles: Yeah, I don't think bitcoiners should waste their time with shitcoiners at all. Those are just people who are marginally closer to becoming bitcoiners.
Peter McCormack: But are they also providing value by allowing the movement of these dollars around the world, which supports Bitcoin?
Christian Keroles: Again, I think that stablecoins are useful, I think that you need liquidity to have an effective economy. A traditional system is obviously way more liquid, even though it has its flaws. That's a dollar-based system, I think stablecoins are an extension of that existing system. They're skeuomorphic, they're whatever, they don't have a lot of the benefits of Bitcoin, but they do have the benefits of dollars, which is that they're more liquid and everyone already operates on them.
So, yeah, they're part of the transition. I do think that stablecoins are part of this transition. I've no animosity towards Ethereum or Tron or anything else, I'm glad those things exist. And those things are of Bitcoin and they're part of this transition to hyperbitcoinisation. We need bridges, we need intermediate steps towards 21 million. It's going to be messy. People have to literally change their entire world view en masse.
People say, "We're at 1% adoption, 5% adoption". No we're not, we're at 0.01% global adoption. The best estimates is that there's hundreds of millions of Bitcoin users, and there's 7 billion people, going on 8 billion people.
Peter McCormack: Do the maths!
Christian Keroles: That's a pretty small percentage of people that literally need to change how they see the world to get onto this economy, and that gets easier over time and there's less gains over time, but we need things to transition them. Tethers are transitionary tools.
Danny Knowles: Have you thought about logistically how you can move to a hyperbitcoinised world? Because, the supply on exchanges is super-low, if demand increases, it will be great for price. But we know that a lot of miners are keeping their Bitcoin, people like Saylor aren't planning on selling. How is there enough Bitcoin to go around?
Christian Keroles: I mean, we can keep dividing it down, so milisatoshis and beyond, and I guarantee we'll have to. Because, I think 1 sat will actually be something that we want to divide into smaller units of value in the future.
Danny Knowles: But as more Michael Saylors come in, more companies hold Bitcoin that they don't plan on selling, obviously that's great for the price of Bitcoin, but does it actually slow the transition to hyperbitcoinisation?
Peter McCormack: Are you asking whether you could have a supply -- there's no supply?
Danny Knowles: Yeah, basically. And I get that you can keep dividing it down. But when does it get to the point where people are holding Bitcoin for so long that there's not enough to distribute to other people?
Peter McCormack: I think there will always be sellers. If there was a sudden massive increase in price --
Danny Knowles: Yeah, but what are you selling to in this world? Are you selling to go to --
Peter McCormack: Well, just say next year, as part of this, Bitcoin suddenly went up to $1 million and other people want to come in. There are people that are going to go, "Holy shit, I've got like 100 of these. I'm going to sell 5 and buy myself a fucking mansion".
Danny Knowles: For sure.
Peter McCormack: So, I think that there are people, tell me if you disagree, but I think there are people who will go, "I can upgrade my life here, I'm already worth $100 million or $50 million. I can suddenly get that dream house", because that's one of the things. I always say that the two scarce assets I care about are Bitcoin and time. I'm 43. People have heart attacks at 45 all the time, or 50, 55, 60. I don't want to wait a decade on my Bitcoin and not live life. I want to go on a holiday I could never go on and buy a house I couldn't have or have a car I couldn't have.
Bitcoin has enabled some of that. If Bitcoin keeps going up, it enables new things, which enables me to redistribute that Bitcoin to other people. That's my thesis.
Christian Keroles: Everyone has a price and ultimately, we are forced to have some high-time preference, because we have to live and we have to consume energy right now. I would encourage bitcoiners to properly evaluate their Bitcoin holdings, properly evaluate how much time they have left on Earth, properly evaluate their family situation, and try to make a valid economic valuation onto how much Bitcoin should you be satisfied with; how much time should you focus on passing that Bitcoin down and protecting that Bitcoin; how much money should you use in a high-time preference way to increase your quality of life?
Zoom out a little bit, because I just think that the barometer's out of whack right now. You see how bitcoiners act. If I'm right about Bitcoin, am I wrong to say that bitcoiners are not taking the gravity of this thing into account?
Peter McCormack: No, I think you're right. Just a quick question for Danny, two questions. Do you think you have enough Bitcoin?
Danny Knowles: No.
Peter McCormack: If Bitcoin goes to $1 million in the next six months, do you sell any?
Danny Knowles: Well, I think if Bitcoin went to $1 million in the next six months, then something has broken down in the world, and then it depends what you're selling it for.
Peter McCormack: Say the equivalent value is not that --
Danny Knowles: Maybe I'd buy a house.
Peter McCormack: There you go.
Christian Keroles: Selling it to change your life.
Peter McCormack: So the truth is, it's not the question, do you have enough Bitcoin; it's, do you have enough buying power?
Christian Keroles: Ultimately, that's what you want to get, which is how much Bitcoin is going to get you that buying power.
Peter McCormack: Or, how much buying power do you have now, and what changes if your buying power 10Xs? If your buying power 10Xs, you might buy a house, someone might buy a Lambo, someone might buy a helicopter.
Danny Knowles: By "someone", you mean you buy a Lambo?!
Peter McCormack: Yeah, of course!
Christian Keroles: You've spent some money on some nice cars recently.
Peter McCormack: I have.
Christian Keroles: I mean, if I can remember correctly, you sold at some opportune times this fall in order to make that happen.
Peter McCormack: I don't think I sold Bitcoin for that car.
Christian Keroles: Okay, well cheers then.
Peter McCormack: But I did for my son. I sold 0.5 Bitcoin to buy my son a car, because he's literally -- that's actually funny you say that; he's in his driving test right now, this very moment.
Christian Keroles: That's awesome.
Peter McCormack: Fuck, he might have been done, let's have a look.
Christian Keroles: You're just thinking of him.
Peter McCormack: Shit, what's this?
Danny Knowles: If he failed, let me cut this out!
Peter McCormack: No, his mum's just sent me a picture of Kermit the Frog biting his nails!
Christian Keroles: Nervous, that what is it!
Peter McCormack: Yeah, so during the time of making the podcast, during COVID, and then there's all the times when I was away with work, he doesn't see his dad for two weeks, three weeks, he never once complained, never once moaned, he was brilliant. So, I attribute part of the success of this to him, so I sold 0.5 Bitcoin when it was at £40,000, so I don't know what that is. And the thing is, I didn't actually have to sell the Bitcoin at that time, I could have gone into different capital pools, but sometimes I want to spend Bitcoin, because I want to appreciate where that's come from and what it's done. And I bought him a car to say thank you.
So, there's that one. The other car, cars, I didn't sell any -- I don't think I did, I'm trying to remember, I don't think I did.
Christian Keroles: Well I mean, regardless, I think that your sentiment scales. I think humans are humans and when humans interact with Bitcoin, it's not always 100% rational or logical, and that's actually rational and logical, because that's how humans operate.
Peter McCormack: I actually gave away more Bitcoin than I sold. I think I gave away 2 or 3 last year to different projects.
Christian Keroles: That's amazing, yeah, I know. I know you support a lot of projects, and I think that there's something about good money that you earned the hard, right way that also wants to encourage you to give back. And Rizzo would make fun of me for saying that Bitcoin instils these additional values, but I see Bitcoin as this operating system. And fiat is a really, really bad operating system, where it's really hard to work on it, but people are forced to. And Bitcoin's just this new operating system, and when you switch operating systems, you behave in just different ways, and that's logical.
Peter McCormack: But you also want to support the system and help the people within it. That's why, when the Ukrainian Army wants to raise money in Bitcoin, they get whatever it was, what was it, like $100 million or something? Or when the Canadian truckers are removed from being able to raise money on GoFundMe, everyone starts sending them Bitcoin.
Every Bitcoin fundraiser gets Bitcoin. People are constantly giving Bitcoin away, we all do it, we all contribute, and I give way more Bitcoin away than I do fiat, because I want to support those projects and people, and I know it's probably the same for you, probably the same for Danny, probably the same for most bitcoiners, and that's a really interesting area of capital allocation, where if another 10X happens, 20X happens, we're all going to go, "Oh, shit, I can help that person. There's that person that wants to quit their fiat job and they want to launch a podcast or start coding Bitcoin. Yeah, I'll give them some money, I'll support them".
Christian Keroles: That's a positive externality of hyperbitcoinisation.
Peter McCormack: It's a huge one.
Christian Keroles: A specific group of people that thought a specific way are enabled to allocate that capital how they see fit.
Peter McCormack: So, what else is in the rallying cry for bitcoiners? Are we missing, do you think, as a collective, and I know people say, "There's no community, there's subcommunities"; but as a collective, do you think we're missing anything; are we thinking too small; are we having stupid fights over irrelevant things?
Christian Keroles: Yeah, definitely both. We're thinking way too small. I would say the English-speaking, western Bitcoin community in general thinks way too small. Or, when they think big, it's so abstract that they can't internalise it. A lot of bitcoiners say, "1 Bitcoin is 1 Bitcoin. Infinity divided by 21 million", but then they don't behave that way. They don't behave like, "Bitcoin is going to hypernise. 1 Bitcoin is probably going to be this percentage of global wealth. I have this much already, how should I behave to manage that?" Otherwise, they wouldn't be quibbling with Tron. They would see that, okay, Tron's just this marginal thing that's on the way to hyperbitcoinisation.
I think we need some more confidence as bitcoiners, I really do, because the hyperbitcoinised future is beautiful. It's a system that has a pure substrate for economic communication, and that is going to fix the world in a lot of different ways. That's what the whole meme, "Fix the money, fix the world" is. Do you really think that you're fixing the money with a fixed supply currency? Okay, how does that scale to fixing the world; what does that look like? And I just think that if bitcoiners truly believed in hyperbitcoinisation, they'd have a lot more empathy, and maybe that would help with adoption, because they wouldn't be so fricking upset or nervous or self-conscious, or whatever. Chill!
Peter McCormack: Okay, final area, because you mentioned it earlier. You said, "Don't worry about the block reward, it's not going to be an issue if everyone's selling on Bitcoin", but there are two schools of thought and I'm just interested in where yours are. There's a school of thought that if everyone's selling, or major institutions are selling on the blockchain, block space will be valuable and therefore there'll be enough in fees to pay for the miners.
There's an alternative viewpoint that if there isn't enough from fees, there will be people like Michael Saylor who might be set on, fuck knows, billions and trillions of Bitcoin; he is incentivised to protect that Bitcoin by essentially paying miners to do that. But not as a fee, just as some, I don't know, some kind of structure to pay the miners to secure it. What do you think happens here?
Christian Keroles: I find both of those scenarios to be really weird.
Peter McCormack: Okay.
Christian Keroles: I think Bitcoin's binary, so I don't think there's this medium success scenario where Bitcoin's somewhat valuable, but then no one is using the system. That just does not make any sense to me. So, it's either the world is on the system and that system's scaled, so you won't need to have final settlement on Bitcoin for every single transaction, it doesn't need to scale that way. But it will have scaled technologically to a way where people can continue to maintain its features, while ultimately settling onto the blockchain that's this layered approach.
On the flipside, there's nowhere where Bitcoin's incentive structure relies on humans being good, or humans wanting to be ambivalent, or whatever. It's either the world settles on this settlement network that has finite supply and finite block space, and we find a way to scale that through human ingenuity, or it completely falls apart. There is no middle ground. And guess what, if we're at 0.001% of Bitcoin users and we're looking at block space usage and we're like, "Wow, man, block space usage is making me kind of nervous, because there were 2 sats per byte to get into the next block". Okay, well multiply that finite block space by two orders of magnitude people entering the system. It's going to change, things will settle up.
Peter McCormack: Because we're still kind of bootstrapping, right?
Christian Keroles: We're so early. And ultimately, if we need to get 99.99% more people onto the blockchain, our shit better be empty right now, otherwise there's no hope of scaling. Look at Ethereum; Ethereum has no hope of scaling. There's 0.000-whatever percent of the planet is on Ethereum right now, and they can't do anything. There's no runway for scaling. At least there's runway for scaling on Bitcoin.
Think exponentially, guys, it's either zero or hyperbitcoinisation. Again, that's my opinion, maybe there'll be a lot of people listening to this show argue against that. And if we go to hyperbitcoinisation, we've got 99.99% more people get in on this thing. What are we even talking about?
Peter McCormack: We're going to need more Bitcoin, Danny.
Danny Knowles: Everyone needs more Bitcoin.
Peter McCormack: Okay.
Danny Knowles: Or maybe they don't, that's the point!
Christian Keroles: Maybe you have enough.
Peter McCormack: I don't know, man.
Christian Keroles: Just don't fuck it up, Peter.
Peter McCormack: I've got big plans for Bedford! Okay, I do have a final question. What do you say to the people who, because I know what happens in the YouTube comments, they use the term "Bitcoin maximalist" pejoratively; what do you say to those people?
Christian Keroles: I hope you have some Bitcoin! I hope you're valuing Bitcoin appropriately!
Peter McCormack: That was easy! All right, cool. Listen, CK, awesome. Anything I've not asked you that you wish I'd asked you?
Christian Keroles: You know, if you want to experience what hyperbitcoinisation looks like today, go to the Bitcoin Conference.
Peter McCormack: Hell, yeah.
Christian Keroles: 6 May to 9 May. I mean, you've been there since we've doing the Bitcoin Conferences, since 2019, and every year it's just getting better and better, so I think that trend continues as well.
Peter McCormack: It's an unbelievable event. The first one I went to in San Francisco blew my mind. I was like, "Fucking hell, this is incredible".
Christian Keroles: That one was really special.
Peter McCormack: It was really special, and it was a Bitcoin Conference, but didn't feel like a nerd-fest. It just had everything right. And it was really cool to go up on that rooftop and see a bunch of friends and hang out; that was amazing. Then roll on to Miami, and it was exponentially better. It was just bigger, just everything about it. Even the shit things that you look back and go, "Urgh".
Christian Keroles: There were some shit things.
Peter McCormack: Yeah, but even Floyd Mayweather coming on, or rolling in with his buddies with their ETH tops on, and him talking shit on stage, I still think that's brilliant, I still think that's a classic moment and I loved it; as well as Michael Saylor coming out with Max Kaiser going, what was it Max was screaming?
Danny Knowles: "Fuck Elon", was it?
Peter McCormack: No, it wasn't, "Fuck Elon".
Christian Keroles: He did definitely scream, "Fuck Elon"!
Peter McCormack: He did, but it was something else. I can't remember what he was screaming, and the whole -- it was such a shame that there wasn't a mic on the crowd, because it was loud. And what was that, 4,000 people?
Christian Keroles: So, yeah, we had 4,000 people on the main stage.
Peter McCormack: And now this year, it's going to be 15,000?
Christian Keroles: 15,000 people.
Peter McCormack: 15,000, so that's a 4X on that in that auditorium ready!
Christian Keroles: We needed more room in the auditorium in 2021. So, yeah, we want to make sure that everyone can at least be there for those big moments, and we have to try to think for the scale, but yeah, 15,000 seats in the main stage. All the other stages are 1,000 seats-plus. So, the open-source stage, the mining stage, these are substantial stages with incredible content, even though they may not be the main stage.
Peter McCormack: I am massively pumped for it this year. Honestly, I'm so excited just to see all your friends, to hang out, to see what you guys have done. I mean, big up to you, David Bailey, Brandon, for thinking super-big.
Christian Keroles: I have to give David Bailey credit, because he's one of those people that's like, "Bitcoin's going mainstream. How do we do that and when?" Like you said, up until that point, Bitcoin events were pretty much very nerdy. So, I think that that scaled a lot, and it's really a testament to Bitcoin, because the Bitcoin economy is growing; that's how I like to talk about it. It is growing, it's getting more substantial, more just people and culture are starting to pay attention.
Peter McCormack: Well, big up to David, to you, to Brandon, to everyone else I've dealt with there, everyone, congratulations, I am so pumped. The whole team's coming, we're all going in, we're really excited about it. So, congratulations on that. CK, where do you want to send anyone, where do you want people to follow you, follow Bitcoin Magazine, follow the event, whatever?
Christian Keroles: Yeah, all of the above. Follow me @ck_SNARKs. I'm Managing Director of Bitcoin Magazine, so everything that happens at Bitcoin Magazine, you can blame me or thank me, but it's a fun time doing that. So, that's @BitcoinMagazine. And then the Bitcoin Conference, @TheBitcoinConf, and b.tc/Conference, get your ticket, use the promo code, pay in Bitcoin; we're discounting for Bitcoin tickets, and just be there. It's an investment in yourself, it really is.
Peter McCormack: All right, man, well thanks for coming on. It's been great to get to know you after these last few years. You're not just a fellow bitcoiner, but you're a friend and we hang out a bunch of times. And I know if I ever need anything from you and I reach out to you, you get back to me. So, thank you and congratulations in the growth of your career, it's amazing to see. And, yeah, roll on, Miami, brother.
Christian Keroles: Cheers, yeah, and same to you.
